RFG Annual Report 2007 - Retail Food Group

06/07
Annual Report
32
Retail Food Group Annual Report
(f) Employee benefits
A liability is recognised for benefi ts accruing to employees in respect
of wages and salaries, annual leave, long service leave, and sick
leave when it is probable that settlement will be required and they are
capable of being measured reliably.
Liabilities recognised in respect of employee benefi ts expected to be
settled within 12 months, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefi ts which are not
expected to be settled within 12 months are measured as the present
value of the estimated future cash outfl ows to be made by the Group
in respect of services provided by employees up to reporting date.
Defined contribution plans
Contributions to defi ned contribution superannuation plans are
expensed when incurred.
(g) Financial assets
Investments are initially measured at fair value, net of
transaction costs.
Subsequent to initial recognition, investments in subsidiaries are
measured at cost in the Company fi nancial statements. Subsequent
to initial recognition, investments in associates are accounted for
under the equity method in the consolidated fi nancial statements
and the cost method in the Company fi nancial statements.
Other fi nancial assets are classifi ed into the following specifi ed
categories: fi nancial assets ‘at fair value through profi t or loss’,
‘held-to-maturity investments’, ‘available-for-sale’ fi nancial assets,
and ‘loans and receivables’. The classifi cation depends on the
nature and purpose of the fi nancial assets and is determined
at the time of initial recognition.
Loans and receivables
Trade receivables, loans, and other receivables that have fi xed or
determinable payments that are not quoted in an active market are
classifi ed as ‘loans and receivables’. Loans and receivables are
measured at amortised cost less impairment.
Investments in Listed Companies
Investments in listed companies are measured at fair value.
(h)
Financial instruments issued by the company
Debt and equity instruments
Debt and equity instruments are classifi ed as either liabilities or
as equity in accordance with the substance of the contractual
arrangement.
Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially at their
fair values and subsequently at the higher of the amount recognised
as a provision and the amount initially recognised less cumulative
amortisation in accordance with the revenue recognition policies
described in note 3.
Financial liabilities
Financial liabilities are classifi ed as either fi nancial liabilities ‘at fair value
through profi t or loss’ or other fi nancial liabilities.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profi t or loss are stated at fair
value, with any resultant gain or loss recognised in profi t or loss. The
net gain or loss recognised in profi t or loss incorporates any interest
paid on the fi nancial liability. Fair value is determined in the manner
described in note 32.
Other financial liabilities
Other fi nancial liabilities, including borrowings, are initially measured at
fair value, net of transaction costs.
Other fi nancial liabilities are subsequently measured at amortised cost
using the effective interest method, with interest expense recognised
on an effective yield basis.
The effective interest method is a method of calculating the amortised
cost of a fi nancial liability and of allocating interest expense over the
relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected
life of the fi nancial liability, or, where appropriate, a shorter period.
(i) Foreign currency
The individual fi nancial statements of each group entity are presented
in the currency of the primary economic environment in which the
entity operates (its functional currency). For the purpose of the
consolidated fi nancial statements, the results and fi nancial position of
each entity are expressed in Australian dollars, which is the functional
currency of Retail Food Group Limited, and the presentation currency
for the consolidated fi nancial statements.
In preparing the fi nancial statements of the individual entities,
transactions in currencies other than the entity’s functional currency
(foreign currencies) are recorded at the rates of exchange prevailing
on the dates of the transactions. At each balance sheet date,
monetary items denominated in foreign currencies are retranslated at
the rates prevailing at the balance sheet date. Non-monetary items
carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value
was determined. Non-monetary items that are measured in terms
of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profi t or loss in the period in
which they arise except for:
exchange differences which relate to assets under construction for
future productive use, which are included in the cost of those assets
where they are regarded as an adjustment to interest costs on foreign
currency borrowings (refer note 3(b)); and
exchange differences on monetary items receivable from or payable
to a foreign operation for which settlement is neither planned or likely
to occur, which form part of the net investment in a foreign operation,
and which are recognised in the foreign currency translation reserve
and recognised in profi t or loss on disposal of the net investment.